If you have ever applied for credit and been rejected or offered a high interest rate, you may have wondered what causes a bad or poor credit score and why your credit rating is so low. Understanding how credit scores work can help you take control of your finances and start improving your score, even if you currently have a poor credit history.
In this guide, we explain what a bad credit score is, what affects a credit score negatively, and why people find themselves with very low credit ratings in the first place.
What Is a Bad Credit Score?
A bad credit score is a rating that suggests to lenders that you may be a higher-risk borrower. In the UK, each credit reference agency (CRA) uses its own scoring system, so there is no single lowest credit score or universal score scale.
However, the categories are usually similar and include:
- Excellent
- Good
- Fair
- Poor
- Very poor – If your score falls into the poor or very poor categories, this is generally considered a bad credit score in the UK.
What Is a Poor Credit Score?
A poor credit score is simply a score that falls below the average range used by a credit reference agency. While the numbers differ between Experian, Equifax and TransUnion, a status of “poor” or “very poor” usually indicates that lenders may see you as a higher risk when deciding whether to approve credit.
What Is Bad Credit History?
Bad credit history refers to the negative information recorded on your credit file. This might include past financial difficulties, missed payments or borrowing that has not been repaid on time. A credit score is simply a reflection of this history.
People with bad credit history may find it harder to borrow money, obtain a mortgage, or access low-interest credit. If you are struggling and need short-term financial support, you can explore loans with fast approval times or a loan to assist with the cost of Christmas to understand your options.
What Causes My Credit Score to Be Low?
If you have asked yourself “why is my credit score low?” or “why is my credit rating so low?”, there are several common reasons. These issues can bring your score down or keep it in the poor or very poor credit score range.
- Late or Missed Payments
Payment history is one of the biggest factors in credit scoring. Missing or repeatedly paying late on credit cards, loans or utility bills is one of the main things that affects your credit score negatively.
- Defaults and CCJs
A default occurs when you fail to repay credit for a prolonged period. Court judgments happen when a lender takes legal action due to unpaid debt. Both will severely impact your score and remain on your file for six years.
- High Levels of Existing Debt
Using a large amount of your available credit can signal to lenders that you are struggling financially. This can push you into the poor or very poor credit score categories.
- Applying for Too Much Credit
Every time you make a credit application, a hard search is added to your report. Too many hard searches in a short period can lower your score.
- No Credit History
If you have never borrowed money or used credit before, you may have what appears to be a poor credit score simply because there is not enough information for lenders to assess you.
- Financial Associations
Being financially linked to someone with bad credit history, such as through a joint loan or joint account, can negatively affect your score.
- Errors on Your Credit Report
Incorrect information on your file, such as old addresses or wrongly recorded missed payments, can bring down your score if not corrected.
What Is Considered a Bad Credit Score in the UK?
Although each CRA uses different numbers, a bad credit score in the UK generally falls into either the “poor” or “very poor” categories on the agency’s scale. This suggests a history of missed payments, defaults or high debt levels, and it tells lenders that offering credit may involve a higher level of risk.
Can You Improve a Very Poor or Terrible Credit Score?
Yes. Even if your score is currently classed as very poor or among the lowest in the scoring system, there are steps you can take to rebuild your rating. These include paying all bills on time, reducing outstanding debt, checking your report for errors and limiting new credit applications.
It takes time for positive behaviour to show on your report, but every improvement helps. Borrowers with previously bad credit history often move into higher score categories with consistent effort.
Support for People With Bad Credit
If you are managing a low credit score and need financial help, Cockle Finance may be able to support you. We consider applications from people with bad credit, poor credit scores and limited credit histories. Our affordability-focused assessments, including loans where we used open banking which mean we can look at your current financial position rather than only your past borrowing behaviour.
If we cannot lend directly, we can act as a broker and introduce you to a trusted partner lender who may be able to help.
This supportive and transparent approach can make borrowing more accessible while you work on improving your credit rating.
Representative Example
£200 payable over 28 weeks at £12 per week. Rate of interest 68 percent fixed; Representative 667.94 percent APR. Total cost of credit is £136. Total amount payable is £336. Applications are subject to standard lending criteria and all loans are subject to status. Over 18s only.
Cockle Finance Limited is Authorised and regulated by the Financial Conduct Authority (FRN No : 804740). Registered Office : 146 New London Road, Chelmsford, England, CM2 0AW